Federal Register / Vol. 72, No. 12 / Friday, January 19, 2007 / Notices 2573 

22 15 U.S.C. 78o–3(b)(6). 

23 15 U.S.C. 78s(b)(3)(A)(iii). 

24 17 CFR 240.19b–4(f)(6). 

25NASD has satisfied the five-day pre-filing 

requirement. 26 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A). 

4 17 CFR 240.19b–4(f)(6). 

2. Statutory Basis 

NASD believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,22 which 

requires, among other things, that NASD 

rules be designed to prevent fraudulent 

and manipulative acts and practices, to 

promote just and equitable principles of 

trade, and, in general, to protect 

investors and the public interest. NASD 

believes that the proposed rule change 

facilitates the goals articulated in 

Regulation NMS, including providing 

an effective mechanism and regulatory 

framework for reporting over-thecounter transactions to NASD. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

NASD does not believe that the 

proposed rule change will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing proposed rule change is 

subject to Section 19(b)(3)(A)(iii) of the 

Act 23 and Rule 19b–4(f)(6) thereunder 24

because the proposal: (i) Does not 

significantly affect the protection of 

investors or the public interest; (ii) does 

not impose any significant burden on 

competition; and (iii) does not become 

operative prior to 30 days after the date 

of filing or such shorter time as the 

Commission may designate if consistent 

with the protection of investors and the 

public interest; provided that NASD has 

given the Commission notice of its 

intent to file the proposed rule change, 

along with a brief description and text 

of the proposed rule change, at least five 

business days prior to the date of filing 

of the proposed rule change, or such 

shorter time as designated by the 

Commission.25

At any time within 60 days of the 

filing of such proposed rule change the 

Commission may summarily abrogate 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors 

or otherwise in furtherance of the 

purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–NASD–2007–002 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NASD–2007–002. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for inspection and copying in 

the Commission’s Public Reference 

Room. Copies of the filing also will be 

available for inspection and copying at 

the principal office of NASD. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–NASD–2007–002 and 

should be submitted on or before 

February 9, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.26

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–688 Filed 1–18–07; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55088; File No. SR–NASD–

2007–001] 

Self-Regulatory Organizations; 

National Association of Securities 

Dealers, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Relating to Amendments 

to the Alternative Display Facility 

Rules 

January 11, 2007. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on January 5, 

2007, the National Association of 

Securities Dealers, Inc. (‘‘NASD’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been substantially prepared by NASD. 

NASD has filed the proposal pursuant to 

Section 19(b)(3)(A) of the Act 3 and Rule 

19b–4(f)(6) thereunder,4 which renders 

the proposal effective upon filing with 

the Commission. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

NASD proposes to amend NASD 

Rules 4130A, 4300A, 4613A, 4617A, 

and 4632A regarding the Alternative 

Display Facility (‘‘ADF’’) to expand the 

prohibition on locking or crossing 

quotations in NMS stocks to include 

pre-opening and post-closing 

quotations, extend the obligation to 

comply with the ADF rules to preopening quotes, and replace the specific 

modifiers identified in Rule 4632A(a)(4) 

with a more general reference to 

modifiers as specified by NASD. Below 

is the text of the proposed rule change. 

Proposed new language is italicized and 

proposed deletions are in [brackets]. 


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4000A. NASD ALTERNATIVE DISPLAY 

FACILITY 

4100A. General 

* * * * * 

4130A. Prohibition From Locking or 

Crossing Quotations in NMS Stocks 

(a) Definitions. For purposes of these 

Rules, the following definitions shall 

apply: 

(1) The terms ‘‘automated quotation,’’

‘‘National Market System Plan’’ (NMS 

Plan), ‘‘intermarket sweep order,’’

‘‘manual quotation,’’ ‘‘NMS stock,’’

‘‘protected quotation,’’ [‘‘regular trading 

hours,’’] and ‘‘trading center’’ shall have 

the meanings set forth in Rule 600(b) of 

Regulation NMS under the Securities 

Exchange Act of 1934. 

(2) The term crossing quotation shall 

mean the display of a bid for an NMS 

stock [during regular trading hours] at 

any time between 8:00 a.m. and 6:30 

p.m. Eastern Time at a price that is 

higher than the price of an offer for such 

NMS stock previously disseminated 

pursuant to an effective NMS Plan, or 

the display of an offer for an NMS stock 

[during regular trading hours] at any 

time between 8:00 a.m. and 6:30 p.m. 

Eastern Time at a price that is lower 

than the price of a bid for such NMS 

stock previously disseminated pursuant 

to an effective NMS Plan. 

(3) The term locking quotation shall 

mean the display of a bid for an NMS 

stock [during regular trading hours] at 

any time between 8:00 a.m. and 6:30 

p.m. Eastern Time at a price that equals 

the price of an offer for such NMS stock 

previously disseminated pursuant to an 

effective NMS Plan, or the display of an 

offer for an NMS stock [during regular 

trading hours] at any time between 8:00 

a.m. and 6:30 p.m. Eastern Time at a 

price that equals the price of a bid for 

such NMS stock previously 

disseminated pursuant to an effective 

NMS Plan. 

(b) through (d) No Change. 

* * * * * 

4300A. Quote and Order Access 

Requirements 

(a) No Change. 

(b) Subject to the terms and 

conditions contained herein, all ADF 

Trading Centers that display quotations 

in NASD’s ADF must record each item 

of information described in paragraphs 

(b)(1) and (2) of this Rule for all orders 

they receive from another broker-dealer 

via direct or indirect electronic access, 

and report this information to NASD as 

specified below. 

(1) ADF Trading Centers must record 

the following information for every 

order they receive from another brokerdealer via direct or indirect electronic 

access [during the trading day]: 

(A) through (N) No Change. 

The information described in 

paragraphs (A) through (N) must be 

reported to NASD within 10 seconds of 

receipt of the order. 

(2) through (7) No Change. 

(c) through (g) No Change. 

* * * * * 

4600A. TRADING IN NASDAQ 

SECURITIES 

* * * * * 

4613A. Character of Quotations 

(a) through (d) No Change. 

[(e) Obligations Regarding Locked/ 

Crossed Quotation Conditions in the 

ADF Prior to Opening] 

[(1) Locked/Crossed ADF Quotations 

Prior to 9:20 a.m.—For locks/crosses 

that occur in the ADF prior to 9:20 a.m. 

Eastern Time, a ADF Trading Center 

that is a party to a lock/cross because 

the ADF Trading Center either has 

entered a bid (ask) quotation that locks/ 

crosses another ADF Trading Center’s 

quotation(s) or has had its quotation(s) 

locked/crossed by another ADF Trading 

Center (‘‘party to a lock/cross’’) may, 

beginning at 9:20 a.m. Eastern Time, 

send an order, making use of direct 

electronic access in accordance with 

Rule 4300, of any size, that is at the 

receiving ADF Trading Center’s quoted 

price (‘‘Trade-or-Move Message’’). Any 

ADF Trading Center that receives a 

Trade-or-Move Message at or after 9:20 

a.m. Eastern Time, and that is a party to 

a lock/cross, must within 10 seconds of 

receiving such message either: Fill the 

incoming order for the full size of the 

message; or move its bid down (offer up) 

by a quotation increment that unlocks/ 

uncrosses the ADF.] 

[(2) Locked/Crossed ADF Quotations 

Between 9:20 and 9:29:59 a.m.] 

[(A) Before a Registered Reporting 

ADF ECN enters a quote that would lock 

or cross the ADF between 9:20 and 

9:29:29 a.m. Eastern Time, the ECN 

must first send, making use of direct 

electronic access in accordance with 

Rule 4300, to the market maker or ECN 

whose quote it would lock or cross a 

Trade-or-Move Message that is at or 

superior to the receiving market maker’s 

or ECN’s quoted price. An ECN that 

sends a Trade-or-Move Message during 

these periods must then wait at least 10 

seconds before entering a quote that 

would lock or cross the ADF.] 

[(B) If a Registered Reporting ADF 

Market Maker locks or crosses the ADF 

between 9:20 and 9:29:29 a.m. Eastern 

Time, the Registered Reporting ADF 

Market Maker must then immediately 

send, making use of direct electronic 

access in accordance with Rule 4300, to 

the market maker whose quotes it is 

locking or crossing a Trade-or-Move 

message that is at the receiving market 

maker’s or ECNs quoted price.] 

[(C) An ADF Trading Center shall be 

prohibited from entering a quote that 

would lock or cross the ADF between 

9:29:30 and 9:29:59 a.m.] 

[(3)(A) In the case of securities 

included in the Nasdaq 100 Index or the 

S&P 400 Index, a Trade-or-Move 

Message must be for at least 10,000 

shares (in instances where there are 

multiple market makers to a lock/cross, 

the locking/crossing ADF Trading 

Center must send a message to each 

party to the lock/cross and the aggregate 

size of all such messages must be at 

least 10,000 shares); provided, however, 

that if an ADF Trading Center is 

representing an agency order, the ADF 

Trading Center shall be required to send 

a Trade-or-Move Message(s) in an 

amount equal to the agency order, even 

if that order is less than 10,000 shares.] 

[(B) In the case of all other securities, 

a Trade-or-Move Message must be for at 

least 5,000 shares (if multiple market 

makers would be locked/crossed, each 

one must receive a Trade-or-Move 

Message and the aggregate size of all 

such messages must be at least 5,000 

shares); provided, however, that if an 

ADF Trading Center is representing an 

agency order, the ADF Trading Center 

shall be required to send a Trade-orMove Message(s) in an amount equal to 

the agency order, even if that order is 

less than 5,000 shares.] 

[(4) An ADF Trading Center that 

receives a Trade-or-Move Message must, 

within 10 seconds of receiving such 

message, either fill the incoming Tradeor-Move Message for the full size of the 

message, or move its bid down (offer up) 

by a quotation increment that restores or 

maintains an unlocked/uncrossed ADF.] 

[(5) An ADF Trading Center that 

sends a Trade-or-Move Message 

pursuant to this rule must append to the 

message a symbol indicating that it is a 

Trade-or-Move Message.] 

[(6) For the purposes of this rule 

‘‘agency order’’ shall mean an order(s) 

that is for the benefit of the account of 

a natural person executing securities 

transactions with or through or 

receiving investment banking services 

from a broker/dealer, or for the benefit 

of an ‘‘institutional account’’ as defined 

in Rule 3110. An agency order shall not 

include an order(s) that is for the benefit 

of an ADF Trading Center in the 

security at issue, but shall include an 

order(s) that is for the benefit of a 

broker/dealer that is not an ADF 

Trading Center in the security at issue.] 

* * * * * 


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Federal Register / Vol. 72, No. 12 / Friday, January 19, 2007 / Notices 2575 

5See Securities Exchange Act Release No. 43863 

(January 19, 2001), 66 FR 8020 (January 26, 2001) 

(SR–NASD–99–53). 

6ECNs are defined in Rule 600(b)(23) of 

Regulation NMS. 

7See Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496 (June 29, 2005). 

4617A. Normal Business Hours 

An ADF Trading Center shall be open 

for business as of 9:30 a.m. Eastern Time 

and shall close no earlier than 4:00 p.m. 

Eastern Time. An ADF Trading Center 

may [remain] be open for business on a 

voluntary basis for any period of time 

between 8:00 a.m. Eastern Time and 

9:30 a.m. Eastern Time or between 4:00 

p.m. Eastern Time and 6:30 p.m. Eastern 

Time. An ADF Trading Center whose 

quotes are open before 9:30 a.m. Eastern 

Time or after 4:00 p.m. Eastern Time 

shall be obligated to comply, while its 

quotes are open, with all NASD Rules 

that are not by their express terms, or by 

an official interpretation of NASD, 

inapplicable to any part of the 8:00 a.m. 

to 9:30 a.m. Eastern Time or the 4:00 

p.m. to 6:30 p.m. Eastern Time periods. 

* * * * * 

4632A. Transactions Reported by 

Members to TRACS 

(a) When and How Transactions are 

Reported to TRACS: 

(1) through (3) No Change. 

(4) Other Modifiers Required to be 

Reported to TRACS. 

Reporting Members also shall append 

the [following] applicable trade report 

modifiers as specified by NASD to all 

last sale reports, including reports of 

‘‘as/of’’ trades[, if applicable]: 

(A) [.SLD,] if the trade is executed 

during normal market hours and it is 

reported later than 90 seconds after 

execution; 

(B) [.SNN,] if the trade is a Seller’s 

Option Trade, [.NN] denot[es]ing the 

number of days for delivery; 

(C) [.C,] if the trade is a Cash Trade; 

(D) [.ND,] if the trade is a Next Day 

Trade; 

(E) [.W,] if the trade occurs at a price 

based on an average weighting or 

another special pricing formula; 

(F) [.1,] if the trade is a Stop Stock 

Transaction (as defined in Rule 4200A) 

([n]Note: the time at which the member 

and the other party agreed to the Stop 

Stock Price must be given in lieu of 

including the time of execution on the 

trade report and the [.1] designated 

modifier shall not be appended to a 

report of a Stop Stock Transaction if the 

Stop Stock Transaction is executed and 

reported within 90 seconds of the time 

the member and the other party agree to 

the Stop Stock Price); 

(G) [.PRP,] if the transaction report[s] 

reflects a price different from the 

current market when the execution 

price is based on a prior reference point 

in time ([n]Note: the transaction report 

shall include the prior reference time in 

lieu of the actual time the trade was 

executed[. The .PRP] and the designated 

modifier shall not be appended to a 

report of a transaction whose price is 

based on a prior reference point in time 

if the trade is executed and reported 

within 90 seconds from the prior 

reference point in time[ or when the 

transaction is a single-priced opening, 

re-opening or closing transaction]); 

[(H) .4, if the transaction was based 

upon a single-priced opening, reopening, or closing transaction by a 

trading center;] 

[(I) .ST,] (H) to identify pre-opening 

and after-hours trades (executed 

between 8:00 a.m. and 9:30 a.m. Eastern 

Time or between 4:00 p.m. and 6:30 

p.m. Eastern Time) reported more than 

90 seconds after execution; 

[(J) .X,] (I) if the trade would be a 

trade-through of a protected quotation, 

but for the trade being qualified for an 

exception or exemption from SEC Rule 

611[. ] ([In order]Note: to ensure 

consistency in the usage of SEC Rule 

611 related modifiers by registered 

broker-dealers, this modifier will be 

used in conformity with the 

specifications approved by the 

Operating Committee of the relevant 

National Market System Plans to 

identify trades executed pursuant to an 

exception or exemption from SEC Rule 

611[.]); 

[(K)] (J) [I]If the trade would be a 

trade-through of a protected quotation, 

but for the trade being qualified for an 

exception or exemption from SEC Rule 

611, members must, in addition to the 

modifier required in paragraph (I) 

above[ .X], append an appropriate 

unique modifier, specified by NASD, 

that identifies the specific applicable 

exception or exemption from SEC Rule 

611 that a member is relying upon[. ] (In 

order]Note: to ensure consistency in the 

usage of SEC Rule 611 related modifiers 

by registered broker-dealers, these 

modifiers will be used in conformity 

with the specification approved by the 

Operating Committee of the relevant 

National Market System Plans to 

identify trades executed pursuant to an 

exception or exemption from SEC Rule 

611[.]); and 

[(L)] (K) [A]any other modifier as 

specified by NASD or the Securities and 

Exchange Commission. 

(5) No Change. 

(b) through (j) No Change. 

* * * * * 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

NASD included statements concerning 

the purpose of and basis for the 

proposed rule change and discussed any 

comments it received on the proposed 

rule change. The text of these statements 

may be examined at the places specified 

in Item IV below. NASD has prepared 

summaries, set forth in sections A, B, 

and C below, of the most significant 

aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The ADF is a quotation collection, 

trade comparison, and trade reporting 

facility developed by NASD in 

accordance with the Commission’s 

SuperMontage Approval Order5 and in 

conjunction with Nasdaq’s registration 

as a national securities exchange. As of 

the Regulation NMS Trading Phase 

Date, the ADF will provide market 

participants (market makers and 

Electronic Communication Networks (or 

ECNs)) 6 with the ability to post 

quotations in NMS stocks, as defined in 

Rule 600(b)(47) of Regulation NMS, and 

the ability to view quotations and report 

transactions in these securities for 

consolidation and dissemination of data 

to vendors and ADF market 

participants. The facility provides for 

trade comparison through the Trade 

Reporting and Comparison Service 

(‘‘TRACS’’) and further provides for 

real-time data delivery to NASD for 

regulatory purposes, including 

enforcement of the firm quote and 

related rules. 

On June 29, 2005, the Commission 

published its release adopting 

Regulation NMS.7 Regulation NMS 

established new substantive rules 

designed to modernize and strengthen 

the regulatory structure of the U.S. 

equity markets. As part of the rules, 

Regulation NMS adopted Rule 610, 

which, among other things, requires 

NASD and the exchanges to adopt, 

maintain, and enforce written rules that 

prohibit their members from engaging in 

a pattern or practice of displaying any 

quotations that lock or cross protected 

quotations and manual quotations that 

lock or cross quotations disseminated 

pursuant to an effective National Market 

System Plan. 

On September 28, 2006, the 

Commission approved SR–NASD–2006–

091, which, among other things, 

amended NASD rules (primarily, ADF 


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2576 Federal Register / Vol. 72, No. 12 / Friday, January 19, 2007 / Notices 

8Rule 610(d) of Regulation NMS requires NASD 

to establish, maintain, and enforce written rules 

concerning locking and crossing quotations. 

9A member is generally required to submit order 

reports when the member displays a quote. If a 

member chooses not to quote before 9:30 a.m. or 

after 4 p.m., the member is not required to submit 

order reports during those time periods. If a 

member displays a quote on the ADF at any time 

during regular trading hours (i.e., 9:30 a.m. to 4 p.m. 

Eastern Time), the member must submit order 

reports continuously to NASD from the time an 

initial quote is displayed on the ADF in a security, 

irrespective of whether the member has a quote 

displayed on the ADF at the specific time that an 

order is received. If a member does not display a 

quote on the ADF in a specific security for the 

entire time period of 9:30 a.m. to 4 p.m. Eastern 

Time on a given trading day, the member would not 

be required to submit order reports on the 

subsequent trade date after the full day of nonquoting on the ADF unless the member displays a 

quote in that security on the ADF. 

10Rule 4632A(a)(4), as amended by SR–NASD–

2006–091, also requires members reporting 

transactions to the ADF to append ‘‘[a]ny other 

modifier as specified by NASD or the Securities and 

Exchange Commission.’’ Pursuant to this provision, 

NASD believes it has the authority to prescribe 

additional modifiers be reported solely to NASD. 

For example, such authority has been used in the 

context of an update to ADF specifications to 

require additional modifiers to designate trades that 

qualify under two existing exemptions from Rule 

611 of Regulation NMS (qualified contingent trades 

and certain sub-penny trade-throughs). This 

authority may also be used to capture additional 

regulatory information that NASD deems necessary 

(e.g., NASD will require more specific delineation 

of the Intermarket Sweep Order (‘‘ISO’’) exception 

than is required by the National Market System 

Plan specifications). The National Market System 

specifications identify both types of ISOs with a 

single modifier. NASD, however, intends to 

distinguish between the ISO exceptions by 

requiring firms to use a separate modifier, as 

defined by NASD, in instances where the executing 

firm is responsible for sweeping the market. NASD 

will provide members with at least 30 days advance 

written notice and sufficient time to make the 

necessary systems changes relating to any 

additional new modifiers. 

11 15 U.S.C. 78o–3(b)(6). 

rules) to align them with Regulation 

NMS and to enhance the clarity of the 

ADF rules. The purpose of the instant 

proposed rule change is to further those 

two goals by amending certain of the 

ADF rule changes approved in SR–

NASD–2006–091 to: (1) Expand the 

prohibition on locking or crossing 

quotations in NMS stocks to include the 

time periods of 8 a.m. to 9:30 a.m. and 

4 p.m. to 6:30 p.m.; (2) extend the 

obligation in Rule 4617A to comply 

with NASD rules to pre-opening quotes; 

and (3) replace the specific modifiers 

identified in Rule 4632A(a)(4) with a 

more general reference to modifiers as 

specified by NASD. The purpose behind 

each of these changes is discussed 

below. 

(A) Locking or Crossing Quotations. 

As approved by the Commission in SR–

NASD–2006–091, Rule 4613A generally 

prohibits a member from displaying a 

quotation on the ADF that locks or 

crosses a protected quotation during 

regular trading hours (i.e., between 9:30 

a.m. and 4 p.m. Eastern Time).8 ADF 

Trading Centers, however, are permitted 

to post quotations on the ADF on a 

voluntary basis each trading day from 8 

a.m. Eastern Time until 6:30 p.m. 

Eastern Time. The proposed rule change 

would extend the prohibition on locking 

and crossing quotations to members 

who voluntarily post quotes on the ADF 

between 8:00 a.m. and 9:30 a.m. Eastern 

Time or between 4:00 p.m. and 6:30 

p.m. Eastern Time. In addition, the 

proposed rule change would delete Rule 

4613A(e), which addresses locked and 

crossed quotation conditions in the ADF 

prior to opening, because the extension 

of the locking and crossing prohibition 

in Rule 4130A to that time period would 

render Rule 4613A(e) obsolete. 

(B) Extension of ADF Rules to PreOpening Quotations. Although ADF 

Trading Centers are required to be open 

for business between 9:30 a.m. Eastern 

Time and 4 p.m. Eastern Time on 

business days, as noted above, they are 

permitted, on a voluntary basis, to post 

quotations on the ADF between the 

hours of 8 a.m. and 9:30 a.m. Eastern 

Time or between 4 p.m. and 6:30 p.m. 

Eastern Time. As approved by the 

Commission in SR–NASD–2006–091, 

Rule 4617A requires an ADF Trading 

Center whose quotes are open after 4 

p.m. Eastern Time to comply, while its 

quotes are open, with all NASD rules 

that are not by their express terms, or by 

an official interpretation of NASD, 

inapplicable to any part of the 4 p.m. to 

6:30 p.m. Eastern Time period. The 

proposed rule change would extend this 

requirement to ADF Trading Centers 

whose quotes are open between 8 a.m. 

and 9:30 a.m. Eastern Time. Thus, in 

general, the ADF rules would apply 

during the entire timeframe during 

which an ADF Trading Center is 

permitted to enter quotations on the 

ADF: 8 a.m. through 6:30 p.m. Eastern 

Time. 

Of particular note, this proposed 

change would, among other things, 

extend the order reporting requirements 

found in Rule 4300A(b)(1) and (2) and 

the firm quote requirement in Rule 

4613A(c) to any quotations posted 

voluntarily before 9:30 a.m. Eastern 

Time or after 4 p.m. Eastern Time. 

Among the changes approved by the 

Commission in SR–NASD–2006–091 

were amendments to Rule 4300A(e) 

requiring that ADF Trading Centers 

submit automated quotations, as defined 

in Rule 600(b)(3) of Regulation NMS, to 

the ADF. Automated quotations are, by 

their nature, firm; thus, the proposed 

rule change clarifies that the firm quote 

rule applies to all quotations submitted 

to the ADF, including quotations 

submitted before 9:30 a.m. or after 4 

p.m. Eastern Time. Further, if a firm 

voluntarily quotes before 9:30 a.m. 

Eastern Time or after 4 p.m. Eastern 

Time, the member must submit order 

reports during that time period as 

required during the normal trading 

day.9

(C) Replacement of Specific Modifiers 

with General Language. Finally, the 

proposed rule change would replace the 

specific modifiers set forth in Rule 

4632A(a)(4) with a more general 

reference to modifiers specified by 

NASD. As approved by the Commission 

in SR–NASD–2006–091, Rule 4632A 

includes specific trade report modifiers 

for Reporting Members to use when 

reporting transactions through TRACS if 

the trade has certain attributes. For 

example, if the trade is a Cash Trade, 

Rule 4632A, in the form currently 

approved by the Commission, would 

require the Reporting Member to 

include a ‘‘.C’’ modifier when reporting 

the trade to TRACS. The proposed rule 

change would amend Rule 4632A(a)(4) 

and delete the references to specific 

modifiers. Instead, the rule would 

require Reporting Members to append 

‘‘applicable trade report modifiers as 

specified by NASD.’’10 Additionally, the 

proposed rule change deletes the trade 

report modifier for transactions based 

upon a single-priced opening, reopening, or closing transaction because 

this is an exchange function. NASD will 

provide members with at least 30 days 

notice of any new modifiers or any 

change in existing modifiers. 

NASD has filed the proposed rule 

change for immediate effectiveness. 

NASD proposes that the proposed rule 

change be implemented on the 

Regulation NMS Trading Phase Date. 

Currently, that date is projected to be 

February 5, 2007. 

2. Statutory Basis 

NASD believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,11 which 

requires, among other things, that NASD 

rules must be designed to prevent 

fraudulent and manipulative acts and 

practices, to promote just and equitable 

principles of trade, and, in general, to 

protect investors and the public interest. 

NASD believes the proposed rule 

change facilitates the goals articulated 

in Regulation NMS, including providing 

an effective mechanism and regulatory 

framework for the over-the-counter 

market. 


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Federal Register / Vol. 72, No. 12 / Friday, January 19, 2007 / Notices 2577 

12 15 U.S.C. 78s(b)(3)(A)(iii). 

13 17 CFR 240.19b–4(f)(6). 

14NASD has satisfied the five-day pre-filing 

requirement. 15 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A)(ii). 

4 17 CFR 240.19b–4(f)(2). 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

NASD does not believe that the 

proposed rule change will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing proposed rule change is 

subject to Section 19(b)(3)(A)(iii) of the 

Act 12 and Rule 19b–4(f)(6) thereunder 13

because the proposal: (i) Does not 

significantly affect the protection of 

investors or the public interest; (ii) does 

not impose any significant burden on 

competition; and (iii) does not become 

operative prior to 30 days after the date 

of filing or such shorter time as the 

Commission may designate if consistent 

with the protection of investors and the 

public interest; provided that NASD has 

given the Commission notice of its 

intent to file the proposed rule change, 

along with a brief description and text 

of the proposed rule change, at least five 

business days prior to the date of filing 

of the proposed rule change, or such 

shorter time as designated by the 

Commission.14

At any time within 60 days of the 

filing of such proposed rule change the 

Commission may summarily abrogate 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors 

or otherwise in furtherance of the 

purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–NASD–2007–001 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NASD–2007–001. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for inspection and copying in 

the Commission’s Public Reference 

Room. Copies of the filing also will be 

available for inspection and copying at 

the principal office of NASD. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–NASD–2007–001 and 

should be submitted on or before 

February 9, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.15

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–689 Filed 1–18–07; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55069; File No. SR–NYSE–

2006–117] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectivenes of 

Proposed Rule Change to Eliminate 

the Exemption from Equity Trading 

Fees for Principal Transactions by a 

Member Organization ‘‘Facilitating’’ a 

Customer Order of at Least 10,000 

Shares 

January 9, 2007. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on December 

22, 2006, the New York Stock Exchange 

LLC (‘‘Exchange’’ or ‘‘NYSE’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been substantially prepared by the 

Exchange. NYSE has designated this 

proposal as one establishing or changing 

a due, fee, or other charge imposed by 

NYSE under Section 19(b)(3)(A)(ii) of 

the Act 3 and Rule 19b–4(f)(2) 

thereunder,4 which renders the 

proposed rule change effective upon 

filing with the Commission. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to eliminate, 

effective January 1, 2007, the exemption 

from equity trading fees applicable to 

principal transactions by a member 

organization in conjunction with 

‘‘facilitating’’ a customer order of at 

least 10,000 shares. 

The text of the proposed rule change 

is available at NYSE, the Commission’s 

Public Reference Room, and http:// 

www.nyse.com. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 


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